Overnight swap and swap-free accounts
What the chart shows before the swap is added
Open a daily chart of EUR/USD and find the price near 1.0850. Each pip of movement is 0.0001 on the chart. At this price, one standard lot moves 10 units of the quote currency for every pip.
The chart does not show the swap. The swap is added after the daily cut-off, which most brokers set near 5pm New York time. If the position is still open at that moment, the broker adds or subtracts the swap for that night.
A position opened and closed within the same day avoids the overnight swap. A position held for several days collects one swap for each night it stays open. The chart only shows price; the swap is a separate line on the account statement.
How the nightly swap is calculated from the chart price
The swap comes from the interest rates of the two currencies in the pair. When you buy EUR/USD, you are effectively holding euros and borrowing US dollars. The difference between the two interest rates, adjusted by the broker, becomes the swap.
The broker quotes the swap in pips or in the account currency. In the example on this page, the swap is -0.12 pip per night for one standard lot. Using 10 units per pip, that is 1.20 units of the quote currency.
To convert to pesos, multiply by the exchange rate the broker uses. At 57.00 pesos per unit, 1.20 x 57.00 = ₱68.40. That is the cost for one night on one standard lot. The figure changes when the rate changes or when the broker applies a different swap rate.
What replaces the swap on a swap-free account
A swap-free account removes the nightly swap. Instead, the broker may charge an administration fee. In the example, that fee is ₱68.40 a night, which is the same as the swap in the previous section.
The replacement is not always a flat fee. Some brokers widen the spread on swap-free accounts. Others charge a fixed fee per lot per night. The contract specification page states which method is used.
Compare the total cost over the expected holding period. If the swap is ₱45.60 a night and the administration fee is ₱68.40 a night, the difference is ₱22.80 a night. Over five nights, that is ₱114.00 more. The swap-free account costs more in this case.
One standard lot of EUR/USD held for one night
| Step | Amount | Note |
|---|---|---|
| Position | 1 standard lot EUR/USD | 100,000 units of the base currency |
| Price used | 1.0850 | the chart level in the diagram |
| One pip | 10 units of the quote currency | 100,000 x 0.0001 |
| Swap rate quoted by the broker | -0.08 pip per night | this figure varies between brokers and is only an example |
| Swap in quote currency | -0.80 | 0.08 x 10 |
| Swap in pesos | -₱45.60 | 0.80 x 57.00, the rate used here |
| Swap-free account charge | -₱68.40 | 0.80 x 1.5 x 57.00, an administration fee in place of swap |
Brokers may round the swap, apply a wider spread on swap-free accounts, add a separate administration fee, or quote the charge in the account currency at their own conversion rate. The peso figures here use one rate and will differ from the rate applied to a real account.
Doing it once, step by step
The following steps show how to find and compare the overnight cost for a position on EUR/USD, using the chart and the contract specification. Do them in order before you place a trade that may be held overnight.
- 01
Open the daily chart of EUR/USD
Load a daily chart and note the current price, for example near 1.0850. Identify the pip size: 0.0001. This tells you how many pips the price moves and how many units of the quote currency one pip represents for your position size.
- 02
Find the swap rate on the contract specification
Go to the contract specification page for EUR/USD. Look for the swap long and swap short figures. They may be in pips or in the account currency. Write down the figure that applies to your direction.
- 03
Convert the swap to pesos
If the swap is in pips, multiply by the units per pip for your lot size. For one standard lot, that is 10 units per pip. Then multiply by the exchange rate the broker uses, for example 57.00 pesos per unit. The result is the nightly cost in pesos.
- 04
Check the swap-free alternative
If you are considering a swap-free account, find the administration fee or the spread difference. Compare it with the swap on the standard account. Use the same position size and the same number of nights.
- 05
Multiply by the number of nights
Decide how many nights you expect to hold the position. Multiply the nightly cost by that number. For example, ₱68.40 a night for five nights is ₱342.00. This total is the cost you pay for holding, separate from any price movement.
- 06
Write the figure next to your trade plan
Before entering the trade, write the nightly cost and the total for your expected holding period next to your entry and exit levels. If the total is large compared with your expected gain, adjust the holding period or the position size. Recheck the swap rate if the broker changes it.
The mistake most people make here
The common mistake is to treat swap as a rounding error and hold a leveraged position for weeks without checking the daily charge. A cost of ₱45.60 a night becomes ₱1,368.00 over thirty nights on a single lot, which can quietly erase a small gain. The fix is to open the contract specification page before the trade, find the swap or administration fee, and write the nightly figure next to the position size. If the account is swap-free, check what replaces the swap, because the replacement is usually a fee or a wider spread rather than nothing.Check yourself
One standard lot of EUR/USD is held overnight with a swap of -0.12 pip per night. Using 10 units per pip and a rate of 57.00 pesos per unit, what is the cost in pesos?
0.12 x 10 = 1.20 units of the quote currency. 1.20 x 57.00 = ₱68.40.
A swap-free account charges an administration fee of ₱68.40 a night instead of swap. Over five nights, how much more is paid than a swap of ₱45.60 a night?
₱68.40 - ₱45.60 = ₱22.80 a night. ₱22.80 x 5 = ₱114.00 more.
Questions that come up next
Where on the chart do I see that the cut-off has passed
The chart does not mark the cut-off. It is a time set by the broker, often near 5pm New York time, and it appears in the contract specification rather than on the price. Look at the clock on your platform and at the broker's stated cut-off, then note whether the position is still open at that moment. The chart will look the same either way, so the swap is only visible later on the statement.
Why is the swap sometimes added to my account instead of taken out
The swap follows the difference between the two interest rates behind the pair. Buying the currency with the higher rate and borrowing the lower one can produce a positive swap, which the broker adds. Selling that same pair can produce a negative swap, which the broker subtracts. The sign depends on the direction of the trade and on the rates at the time, so the same pair can pay or charge.
Does a swap-free account remove every nightly cost
No. It removes the swap, and the broker usually puts something else in its place. That replacement may be a fixed administration fee per lot per night, or a wider spread on every trade, or both. The contract specification page states which method that broker uses. Compare the replacement cost with the swap before deciding which account type suits the holding period.
How do I work out the cost for a position smaller than one standard lot
Scale the nightly figure by the size of the position. If one standard lot costs ₱68.40 a night, a position of one tenth of a lot costs about ₱6.84 a night at the same rate. Brokers may set a minimum charge, so a small position is not always charged in exact proportion. Check the specification for any minimum before you rely on the scaled figure.
Can the swap change while my position is still open
Yes. The rates behind the pair move, and the broker can change its own adjustment at any time. A swap quoted today is not a promise for next week. The charge applied on each night is the one in force on that night. If you plan to hold for many nights, treat the figure as an estimate and check it again as the position stays open.
What happens over a weekend or a public holiday
Markets close, so no cut-off passes on those days. Brokers often apply several nights of swap at once on the first trading day after the break. That single charge can be two or three times the usual nightly amount. The contract specification usually names the day this happens, so read it before holding a position across a weekend.
In the Philippines
- Regulator
- SEC Philippines
- Money
- peso, written ₱ (PHP)
- Funding methods
- GCash and bank transfer
- Example instrument
- EUR/USD, around 1.0850
- Pip value on one standard lot
- 10 units of the quote currency, converted at the current rate
The words used on this page
- swap
- A small amount added to or taken from an account when a position is held past the broker's daily cut-off. It comes from the interest rates of the two currencies in the pair. It is charged for each night the position stays open.
- cut-off
- The time each day when the broker applies the overnight swap to open positions. It is set by the broker and is often near 5pm New York time. A position closed before that moment avoids the charge for that night.
- standard lot
- A fixed trade size used in the examples on this page. One standard lot of EUR/USD moves 10 units of the quote currency for each pip. Smaller sizes are fractions of a lot and are charged in proportion, unless a minimum applies.
- pip
- The smallest common step in a currency price, equal to 0.0001 on EUR/USD. At a price near 1.0850, one pip is the fourth decimal place. Swap is often quoted in pips per night before it is converted to the account currency.
- contract specification
- The broker's page listing the details of an instrument, including the swap or administration fee and the cut-off time. It is the place to check the nightly cost before placing a trade. The figures there can differ between brokers.
- administration fee
- A charge some brokers apply on swap-free accounts in place of the overnight swap. It may be a fixed amount per lot per night or a wider spread. The contract specification states which method is used.
What to take away
- The chart shows price only; the overnight swap appears later on the statement, so check the contract specification before holding a position past the cut-off.
- A swap-free account removes the nightly swap and usually replaces it with an administration fee or a wider spread, which can cost more over a long hold.
- Multiply the nightly figure by the number of nights and by the position size to see the total, and remember that brokers round, convert and set minimums differently.